Thelma and Louise car.

Corporatocracy

Excellent Debate (scroll down) in the comments section of the blog yesterday. But to understand how politically radicalized/changed the USA has become you have to think outside the box and NOT in terms of Democrat against Republican. Everyone in the debate made some excellent points.

• Obama/Democrats are sucking up to Wall Street and they love those corporate donations
• Romney/Rebublicans – He IS a Gordo Gekko Investment Banker who is trying just as hard to suck up to Wall Street.

The simple undeniable fact is the USA is radically shifting away from a democracy of the people and toward a Corpocracy, (I like this spelling) by of and for major global corporations who run everything from think tanks to lobbyists to major media outlets Latest Example – EXXON has found a home of Fox News (I still boycott Exxon)

Almost all other democratic governments, especially those in Europe are focused on the rights of people. Here, aided by a recent Supreme Court decision our entire political structure is focused more on the major global corporations.

Globalized corporations bottom line is profits and if it means more profits they will hire abroad. They also can now grow faster by selling abroad to growing middle classes than a shrinking one here. Therefore You are growing more irrelevant in a profit driven globalized world.   Globalization, is driving the American shrinking middle class and our democracy off a cliff, but its the new reality.

You can foster it, accept it, or fight it or maybe its too late and you drive your car off a cliff. I happen to love my democracy. What’s most important is you recognize the radical change in our political world. We are Not in Kansas anymore

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KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

• It is my guesstimate that bond king, PIMCO’s Bill Gross is a Rand Paul libertarian. Its not a guess that he is very influential in the massive bond market. His following tweet about the potential form of QE #3 mid afternoon yesterday could influence traders.

• The McClellan Oscillator (MO) chart exploded higher to -22.40 (anything below -60 = oversold, -30 = modestly oversold)  From yesterday Another “snapback” oversold rally is possible.  The last oversold rally was a dead cat bounce. = NEUTRAL (Obviously still a bit closer to overbought than oversold)

• $USD The US dollar has fallen the last two days and may have established a lower high on its chart. Dollar is usually secondary to MO as a forecasting tool when the MO gets to oversold/overbought levels.  = bullish

• Reading The Tea Leaves - Short term – Short and long term outlook would be far more bullish if we had a big volume confirmation rally today. However –  Staying with the same dead cat bounce pattern of lower highs and lows till it breaks down. Pattern in place since May 1

• Reading The Tea Leaves - Longer Term -  ”See May 20th blog for forecast for this summer.“

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Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

NLY - Annaly Capital Mgt. Ultra high dividend stock.

TZA - 3 times short small cap stocks Last week - Added another 1/2 position to TZA at 39.75 at/near open Wednesday.  Bought another 1/2 TZA position at 39.75 Thursday. Sold a 1/2 position near the open at 41.15 (see comments section of yesterday’s blog) for almost +4% gain. Combined with +8% gain yesterday = total of +6% on TZA with 1/2 position still open.

Gold/Silver – No trends except gold is out performing stocks and silver. A major editorial on this in near future

From yesterday -. May sell more early. Will add another full or 1/2 TZA positions on any modest market rally – This will be announced in comments section of blog – No modest, but a big rally at open in big volume so I sold. More likely to add TZA than subtract

Investors411 has recommends using TZA or SDS as a hedge/insurance against losses in NLY and especially if you own other dividend stocks (see past month+ blogs on dividend stocks.)  This way you protect prices of dividend stocks against falling prices and still collect the dividend.

Repeat Strategy remains

• Short any rally - Investors411 will use TZA (3X short small cap stocks) and SDS (2x short S&P 500 more conservative) .
• Sell long positions into any rally -

Disclosure - I own NLY, & TZA – I buy all stocks mentioned in the hypothetical Investors411 portfolio.

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Look for an enlightened Paul’s Corner every Tuesday & Thursday and the always informative comments section every day.

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The Fed has moved from an expanding money supply to a neutral – No QE #3. Congress is threatening to contract the money supply. “We [the USA] need to grow at this point more than anything else.” Investors411 outlook will remain negative on the USA unless the Fed and/or congress return to more pro growth policies.

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Longer Term Outlook

Neutral/CAUTIOUSLY BEARISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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Global Economic Monsters

• Over Leveraged Shadow Banks – Financial reform has fizzled in congress. (see a zillion past Investors411 for more) Short term – a shot in the arm for shadow institutions and their stocks. Long term - FDIC guarantees deposits of YOUR $ and they can still take any risk they want.  Bubble building casino capitalism, where gains are privatized and YOU socialize the risk.
• Debt Crisis – Europe Debt on the hot seat right now. Aussie’s Clarke and Dawe do a great job explaining this and their drop dead funny. Now add to this all the derivatives (over leveraging) placed on debt. First a bailout. Now central banks around the world are pouring $ into the Euro to stabilize it and keep dollar low.
• China Slowing Growth – A country can’t keep its GDP growing at 10% forever. Google [China, Slowing, Growth] and you’ll find story after story worried about a Chinese housing bubble or manufacturing decline. China’s #1 ETF – FXI This ETF used to outperform the S&P 500 by a wide margin. Now it underperforms. Investors $ are speaking and there is some cause for concern.
• BP/RIG/HAL Oil Spill – Major damage to these stocks and more importantly the environment. We all know its only just begun and yesterday was the start of hurricane season. 27% of America’s oil & 15% of our natural gas comes from the Gulf.
• “Supreme Leader,” “Great Leader,” ” Dear Leader” AKA Kim Jong-il –  You’ll never see a flotilla of Palestinian or any other peace activist off the shore of North Korea. (A double standard) Most repressive country on the planet, always confrontational and has nukes. Just committed an act of war by sinking South Korean naval ship.
• Mid East - Where to start? Iran, Afghanistan, Iraq etc. Current Crisis between Israel/Turkey does far more than put the $3 billion in “free” trade between these two democracies at risk. Terrorist through out the region are now in a stronger position and embolden because of this confrontation. Everything in the MidEast is oil/energy related.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

Significant Melt UP in light volume = Moderately Bullish

Obama and his administration seem to be dropping hints that Friday’s job numbers are going to be good. This was fundamental behind melt up. Buy the rumor & sell the news.

Volume did NOT confirm the price move. So what else is new. Volume, which is historically the #1 confirmation factor of a price move has NOT worked for many many moons. = Neutral

Massive amount of bad news – N. Korea, BP failed to plug oil, Israel/Turkey/Gaza, Euro debt crisis – yet we have a melt up. How markets react to news is our #2 (now #1) confirmation factor. Yesterday was a good price reaction despite bad news. The potential bad news is built into price right now = Bullish

MO has some positive momentum but in Neutral territory = NEUTRAL (NEUTRAL is all in CAPS because this right now is most important indicator.)

AAPL is the unofficial leader in this rally and the chart formed a T (see chart) yesterday in weak volume. Could be a top. Moderately Bearish

Expect Fed and other central banks to keep  propping up Euro.European markets at 6 week high.  = Bullish

Reading the tea Leaves – Historically, it difficult to see a follow through day after yesterday’s melt up in light volume. Baring an unforeseen incident – like Israeli’s killing more peace activists on ship heading to same area – it wouldn’t be a surprise to see a rally into the jobs number.

Significant Indexes

• McClellan Oscillator took a huge jump higher to -5.78 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is NEUTRAL territory.  How the MO works.
• US Dollar –  The dollar fell -0.02% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Currency markets are now being directly manipulated by out Fed and other central banks. This manipulation to keep the Euro from falling. Chart shows at least 6 attempted breakouts above @87.5 have failed in last 2  1/2 weeks. = Bullish.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Have NOT had a chance to update this/last weeks trade.

EVVV was eliminated from YOUR stock list because company was bought – (Thanks to Paul R for info)

IMAX remaining shares sold near open at 17.02

Windows of opportunity to BUY and Sell -

The McClellen Oscillator (MO) is working well right now and +60 or above = Overbought = sell. -60 or below = Oversold = buy

This works best with the broad based ETF’s that mirror the major indexes or for those who can handle more risk ETF’s that do 2x or 3x what major indexes do like TYH that does 3X major tech stocks. Approaching or below -60 buy. The further the better.

Above +60 sell or go short with ETF’s that short major US indexes. Example SDS (2X short S&P 500)

One major reason I stated that there was a “decent trading” opportunity yesterday was the MO was at -50 or almost oversold. We had a low volume melt up.  One major reason the MO was not an investing opportunity was we were not below -60.

Mea Culpa = Hindsight is great = should have invested MORE when MO was between -60 & -130. If I had, I’d start to take a little profit right now

(Will continue analysis of MO later)

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING